This activity is one of many components necessary for a quality early literacy curriculum.
As you say an object, pay attention to pausing for 2-3 seconds at the break in the compound word (i.e. hair/brush)
Encourage your child to point to or circle the correct object.
The Book Chart included is a great motivational tool for your child. Start each week by putting a circle on the chart to give them a goal to reach that week. Every time your child reads a literacy story, plays a game or completes an activity sheet they can put a sticker on the chart. You can give your child incentives if they meet their weekly goal.